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Not a blank sheet

Richard Burden MP

By the time you read this the future of Rover and Longbridge should be clearer than it is right now. At the time of writing, Alchemy's outline deal with BMW is being challenged by the Phoenix consortium.

Well over a month has passed since BMW announced their decision to break up and sell the Rover Group of companies. Subject to the legal and administrative procedures being sorted out, it seems certain that the Land Rover plant, based in Solihull to the South of Birmingham, will become part of Ford, as will Rover's R&D plant in Warwickshire and a large number of its engineering staff. BMW have said they want to hold on to Rover's Cowley plant in Oxford, which has had a good deal of investment and currently produces Rover's top of the range car, the Rover 75. Even though the 75 will not remain a BMW brand, Cowley will produce a new Mini to be sold from the German company's stable. That car had been scheduled for production at Longbridge in my Birmingham Northfield constituency. Indeed the new production plant for it was already being built when BMW announced its decision to walk away.

The issue has dominated the headlines in the Midlands like no other in recent years. It is not surprising. Some 50,000 jobs in the region are directly or indirectly dependent on Rover. The fate of around 24,000 of those will be determined by what happens to Longbridge alone. 2,300 of Longbridge's 10,000 workers live with their families in my constituency. What happens at the plant will even decide whether the corner shop next to my house stays in business. When people talk about the livelihoods of whole communities being at stake, they are not exaggerating. In Dagenham, people living close to the Ford plant could tell a similar story.

So when commentators pronounce that we should now write off "old" manufacturing industries like car production, they should remember that we do not have the luxury of a blank sheet of paper on which to design the economy of the future. Real people are affected here and now. Change has to come, and government has a responsibility to help our industries to restructure, diversify and to develop the technologies that can enable our manufacturing heartlands to win in the markets of the future. But we start from where we are and must not ignore the fact that the people we represent need jobs now as well.

There are some pointers about the direction in which our automotive industry can go. Ownership of traditional car firms will doubtless continue to concentrate in the hands of the big multinationals - Ford, Daimler Chrysler, GM etc - and overcapacity in the industry will affect the future of traditional plants. But there is great potential in partnership contracts with the big players, and in developing our base in the technologies that add real value in vehicle production - performance engineering, intelligent vehicle systems that can contribute to tackling congestion, safety related and environmental technologies and so on. The basis of many such technologies is already being developed in Britain's motorsport industry, where clusters of specialised firms have spread across the Midlands, dominating race and rally series worldwide and earning over 1bn in export earnings for this country. With the right nurturing, it could earn a lot more - including in areas of production beyond automotive engineering itself. It provides the potential for diversification both within and beyond the motor industry, but starting from the industrial base we already have.

The Rover crisis also provides us with other lessons. The way BMW behaved in announcing the break up of Rover was nothing short of scandalous. Not only did they keep ministers in the dark, but they misled their own dealers and workers - who had done everything asked of them to raise productivity - into believing that BMW was in for the long term with Rover. So badly has the whole thing been handled by BMW that their reputation has been tarnished in the business world as well as amongst people in this country. There is a real issue, about how domestic and EU law can allow a European firm to behave in this way in a member state. The Rover saga has led more people to notice that it is simply easier to keep employees in the dark in this country, and then sack them to move production elsewhere, than it is in some other European countries. The opportunity is there to argue for strengthened employment protection and consultation rights both at home and in the EU. It is an opportunity we should not let slip away.

Finally, we should recognise that whilst the relative strengths of the and euro provide no excuse for what BMW has done, the fact remains that they are causing huge difficulties for manufacturing exporters. If improvements in productivity are merely cut away by the exchange rate firms simply cannot progress. Maybe restructuring the Bank of England to give it a clearer regional focus could help. A weak euro may have short term advantages for German exporters but it also has a severe downside for Europe as a whole if there is such a disparity with the currency of a member state like the UK, so action needs to be taken with our European partners to strengthen the euro.

Richard Burden is MP for Birmingham Northfield


May/June 2000